In 2025, passenger traffic in the Asia-Pacific and Middle East regions is projected by ACI to grow at the fastest rate globally, with a forecasted increase of 7% compared to the world average of 5%. The Apac region alone has a population of 4.7 billion, which ACI expects to rise to between 5.3 billion and 5.5 billion over the next 30 years. In contrast, Europe and North America, which currently have a combined population of 1.3 billion, are projected to reach just 1.4 billion over the same period.
Referring to Asia’s dominance in terms of passenger traffic volumes, Baronci believes the region hasn’t peaked. “It’s actually the opposite,” he says. Several factors contribute to this, he adds, including GDP growth, population demographics, and the propensity to fly, which is linked to disposable income. Asean, in particular, also has room to grow, with most countries in the region averaging 0.5 trips per capita, which is well below the two trips or more per capita in North America and the 1.8 trips per capita in Europe. “So there is a margin for growth.”
“If you look at networks, nations like India and China will continue to be a key source of revenue from an economic perspective, because these countries also have a very low propensity to fly. So they will [continue to] grow,” adds Baronci.
Mega airport
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By 2033, the Asia-Pacific region is projected to experience a CAGR of 4.7% in total passenger traffic, while the Middle East is expected to grow at 4.9%, both outpacing the global average of 3.8%. Looking further ahead to 2053, the Apac and the Middle East regions are forecast to maintain above-average growth, with CAGRs of 3.6% and 3.7%, respectively, compared to the worldwide average of 3%. Africa is expected to perform similarly, with a projected CAGR of 3.8%.
This sustained growth underscores the importance of expanding airport capacity, particularly in high-demand regions like Apac and Asean. “After Covid, after having considered... the complexity of staying resilient, it’s now time to build for the future. And this is what Singapore is doing,” says Baronci, referring to Changi Airport’s forward-looking investment in Terminal 5.
When its first phase opens in the mid-2030s, Terminal 5 will be able to handle up to 50 million passengers a year, increasing Changi Airport’s total annual capacity to 140 million. The airport’s existing terminals currently accommodate a combined 90 million passengers. The Singapore Airlines(SIA) Group, which now operates across three terminals, will relocate to the new facility. Other airlines will also have opportunities to expand their operations at Terminal 5 and across the rest of the airport. With this increased capacity, Changi Airport will be classified as a “mega airport”, defined as one that can handle over 100 million passengers a year, says Baronci.
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Once completed, Terminal 5 will be integrated into the 1,080-hectare Changi East development, offering enhanced connectivity via train, bus, taxi, and other transportation services. It will provide direct access to MRT stations on both the Thomson-East Coast Line and the Cross Island Line. Its proximity to Tanah Merah Ferry Terminal also opens up opportunities for ferry links to neighbouring destinations.
The new terminal will also leverage advanced technologies such as robotics and AI to automate and digitalise operations. This forms part of an airport-wide transformation programme focused on next-generation, integrated operations, utilising intelligent systems and data for comprehensive airport management.
In parallel with its technological ambitions, Terminal 5 has been designed with resilience in mind. Its airfield is situated at an elevation of 5.5 metres above sea level, designed to mitigate the effects of extreme weather and climate change. Drawing on lessons from the Covid-19 pandemic, the terminal will also have the flexibility to operate as smaller, self-contained sub-terminals when required.
At the Terminal 5 groundbreaking on May 14, Prime Minister Lawrence Wong said Singapore must focus on maintaining its air hub’s competitiveness and global connectivity as other countries modernise their airports. Photo: Albert Chua/The Edge Singapore
A next-generation air hub
Beyond its award-winning facilities, the key to success for airports lies in providing a seamless passenger experience. This involves addressing “critical segments” such as check-in, security, immigration and boarding from a consumer-centric perspective, says Baronci.
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Given that Singapore serves primarily as an international hub, the highest points of stress for passengers tend to be immigration and security. In this regard, airports in the Middle East, including Dubai, Abu Dhabi and Doha, have made significant strides, with some nearing the advanced systems already in place at Changi.
“So there is this race to make sure that [I’m] not simply as good as my competitor, but also I do so because I have a need to process a passenger in a few seconds, when it took me minutes in the past,” Baronci notes. He adds that immigration queues during peak hours are a “hot potato” for airports. Other factors, such as the use of AI, must also be considered, as it can help break down silos between different operators through data integration.
“When you have a process like the turnaround of an aircraft, you can’t only work reactively. This is again what belongs to the past,” he says. “For these kinds of platforms, what you want to make sure is that you have a predictable model, so a model whereby you can calculate or estimate,” he adds. In April, CAG announced the introduction of ‘Aircraft 360’, a new approach to airport turnaround management across its terminals. This initiative will enable the airport to accommodate an additional 12 flights per day using contact gates during peak hours, said CAG CEO Yam Kum Weng.
Before the Covid-19 pandemic, Changi Airport was often regarded as the benchmark for its sophisticated model and seamless passenger experience. However, Baronci is quick to point out that each airport offers a unique experience, which can be subjective, despite the “level of competition between hubs.”
In terms of passenger flow, he notes that Changi Airport, along with certain airports in the Asia-Pacific and Middle East regions, has made faster progress compared to other regions, including Europe.
To maintain its competitive edge, Baronci highlights the Singapore government’s success in coordinating and consulting with industry stakeholders, ensuring a unified approach to strategic infrastructure development in the country.
“It is comfortable to invest in the fact that money is rightly invested to generate a social and economic impact that’s positive. Crucial to the country. This role of facilitator is critical, and it comes at the right time,” he adds.
Public versus private airports
When asked about airport ownership, Baronci says he is “fundamentally neutral”, although he notes that airports within Apac are predominantly under public ownership with a “few important [private] exceptions” such as the GMR Group and Adani’s airports in India.
“There are always pros and cons,” Baronci notes, adding that the difference in ownership lies very much in the country’s national transport policy.
In the case of publicly owned airports, such as Changi and those in the Middle East, they must align with national considerations. “You want to generate social and economic impact. You evaluate the risk of it, you consider what are the needs, the capabilities of the country, and then you estimate what the best solution is.”
Following the groundbreaking ceremony officiated by Prime Minister and Finance Minister Lawrence Wong, works are expected to begin, with several contracts anticipated to be launched over the next few years.
Changi East project, which Terminal 5 is part of, expected to cost tens of billions of dollars, although the actual number has “no meaning” at this time, due to a long construction period with tenders going out at different times, says Ong Chee Chiau, managing director for Changi East at CAG. “It also depends on the market at the time and the scope.” So far, CAG has awarded two contracts worth about $4.75 billion to build the new terminal’s substructure and airside infrastructure. Peak construction is expected to take place in 2029, with over 25,000 workers on site concurrently, Ong adds.
When asked whether higher air fares or levies will be imposed to cover costs, similar to CAG’s move to increase airline and passenger fees in November 2024 to finance its $3 billion investment to upgrade its current four terminals, Ong says Changi East is funded from three sources — the government, CAG and airport users.
The government will fund the majority of the cost due to the strategic investment in the air hub. CAG will fund the other larger portion through surpluses and borrowings. Finally, charges for the final group, airport users, will be kept at a “minimum”, Ong adds.
To Baronci, investments in upgrades are welcome, but the way costs are being recovered cannot impact the taxpayer. However, he believes that they have to impact passengers who have voluntarily decided to travel, which he calls the “user pays principle”, a model that is formalised at the International Civil Aviation Organization (ICAO) level.
After all, it is the passengers who enjoy the services required by regulators, says Baronci, who notes that most of the costs are related to capital expenditures (capex), infrastructure, service, security, and other services. “Of course, what I want to stress is that nothing is for free,” he laughs.
That said, Baronci doesn’t believe any increase in airport charges will significantly affect passengers’ decisions to travel through a particular airport. Passengers still have the flexibility to choose different airlines based on airfare costs. When considering airfares, however, factors like labour and fuel costs also come into play. Airport charges typically account for only around 4% to 5% of an airline’s average operating costs.
Stefano Baronci, Director General of Airports Council International Asia-Pacific and Middle East, describes the Apac region as arguably the “most dynamic” in terms of growth, innovation and long-term potential. Photo: Airports Council International
Ongoing macroeconomic environment
Given the current macroeconomic climate, marked by geopolitical tensions and trade wars, the ACI will need to monitor the situation “very, very seriously.” “We rely on the decisions of policymakers to make the right choices… from a commercial and geopolitical point of view,” he says, although he notes that it is too early to determine whether there will be any impact on air traffic trends.
In his view, any impact will be visible in the third or fourth quarter of this year. However, looking to the past helps, says Baronci, referring to the first Trump administration from 2017 to 2021, during which tariffs were also introduced. At the time, cargo traffic was impacted with air freight volumes down 3.3% y-o-y in 2019, yet passenger behaviour was not affected, he adds.
This is why Baronci finds it difficult to accept that passengers will stop travelling due to the tariffs. “I think it’s too early and it’s again, a discretionary decision of a person, an individual,” he continues.
From a macroeconomic perspective, if trade tensions escalate and lead to higher inflation, travel could be impacted as disposable incomes are affected. “We hope this trend of tariffs won’t continue or will not be exacerbated,” he adds. However, it’s too early to predict, as most countries are still in negotiations.
“What matters more, in my view, is what Asia has delivered in the past, what [it’s] delivering now, and what it’s expected to deliver in the future,” says Baronci. “Over the last 25 years, emerging markets that Singapore [has] connected with have grown faster than developed countries, and traffic in these emerging markets, including China and India, has reached parity with the West over the last 25 years.”
Based on 2024’s figures, the outlook is “very comforting,” with platforms like China, Changi, and Hong Kong ranking among the top 10 for international passenger volumes. Over the next five to 10 years, Baronci anticipates that more destinations will see significantly higher traffic, driving increased revenue. “In order to do so, again, you invest not only because you want to improve the passenger experience, but because you want to increase connectivity. You need different infrastructure from what you have now,” he says.
When asked about the possibility of reaching peak air travel, Baronci believes that day will have to come. “Look at Europe and North America. Europe has not built a brand new airport, with the exception of Istanbul, if you want to consider Istanbul as part of Europe,” he says.
“In terms of capacity, it’s true that they got to a point where [Europe] has to decouple revenue generation, revenue increase from passenger growth. And North America is also a mature market,” he adds.
In Asia, the good news is that the region still has a “huge margin for growth,” meaning saturation will only be a problem for the next generation, not within the next 20 to 30 years. Looking further ahead, Baronci believes the aviation industry, using AI, will adopt a “completely different model” in 15 to 20 years, a shift that will reflect a departure from the global guidelines established by ICAO in 1974.
Domestically, Prime Minister Wong views Terminal 5 as presenting numerous opportunities for Singaporeans. “The construction itself of T5 is a significant, complex engineering project, and our local businesses will have the opportunity to participate in these projects.”
He adds: “Some are already involved in ongoing works. When T5 is operational, there will be more demand for services and workers, both in the airport as well as in other industries, which will go together with it.”
